Tuesday, November 25, 2008

DJIA + 36.08, +0.43%
SP500 + 5.58, +0.66%
NASDAQ Comp. - 7.67, -0.50%
Russell 2000 + 6.38, +1.46%
Exchange NYSE NASD
Advancing 2,505 1,597Declining 1,195 1,255
Oil $50.77 -$3.73
Gold $819.50 +$0.00
SOX 187.02 -4.18
VIX 60.90 -3.80
Strongest Sectors: XLF +5.83%...XLB +3.67%...XLU +1.99%
Weakest Sectors: XLP +0.56%...XLV +0.66%...XLY +1.26%
Sector Watch
Up Trending:
Sideways: XLE, XLP, XLU
Down Trending: XLF, XLY, XLV, XLI, XLB, XLKThe DJIA, SPX and RUT moved higher on Tuesday, however, upward momentum slowed down. With the Thanksgiving holiday on Thursday and a half trading day on Friday, which is traditionally the lightest trading volume day of the year, this is not overly surprising. Many traders will close positions out on Wednesday and not return until next week.
The fact that profit taking did not push the indices below Monday’s S1 level shows that buyers are still in control. If markets move below Tuesday’s low or Monday’s S1 level, some traders will view this as an opportunity to take profits on short-term bullish trades.
The Financial Sector, XLF, was the strongest sector again on Tuesday gaining more than 20% over the past two days. Airline stocks had positive gains on Tuesday with LCC and DAL gaining more than 14% and UAUA up over 24%.
The SPX closed above its Oct. 10 low for the second straight and is trading in its sideways trend of the past 6 weeks once again. The Nasdaq and RUT are still trading below their October lows.
Index Commentary
The DJIA formed a white spinning top…sellers appeared at 8,600 level for the second day in a row…closed above its Oct. 10 intraday low for third straight day…watch R3 from Wednesday…8,500 continues as an important intermediate resistance level.
The SPX formed a white spinning top…closed above Oct. 10 low for the second straight day…sellers appeared the 865 area for the second day…840 continues as a key support area and 915 a key resistance area.
The Nasdaq formed a black spinning top…sellers came in at the 1,486 level…1,500 continues as a key resistance area…still trading below Oct. 10 and 24 lows.
The RUT formed a potential hanging man pattern…closed above its Oct. 28 low…450 is still a key resistance area…still trading below Oct. 10 low.
Stocks to Watch on Wednesday
Leading Stocks Holding Above 30 DMATEVA… AXYS…AYE…CL…DV…EZPW…MMM…PCLN…PPD ANSS…ASIA…BAP…CBST…DLTR…ESI…FLR…FSTR…PRGO…RCI…SHW...TKC…WMS
Stocks Moving Above 30 DMAAME…JCOM…JEC…NOV
Stocks Moving Below 30 DMAMIG…OSIP…SWN
Stocks Staying Below 30 DMARTN…AFAM…MYGN…VIVO…AOB…CERN…CHTT…FLIR…GILD…GIS…PSSI
Tuesday’s ActionMoving Up: STRA, BIDU, MA, FSLR, MON, GS, PNRA, HANS, UAUA, CNX, CF, LAMR, AEM, FWLT, ANR, PCLN, NUE, GDX, COH, ONXX, SINA, MS, SCHN, ZION, KBE, LCC
Moving Down: ESRX, INFY
Intermediate Term Market Trend: Neutral – DJIA, SPX, Down – Nasdaq, RUT
Short Term Market Trend: Up

1:23 ET DJIA -83...SPX -6.5....Nasdaq -28...RUT -5.6....Sox -5.5....Oil -$3.58 VIX -0.05After an 1,150 point rally in the DJIA on Friday and Monday stock indices are taking a breather. From a traders perspective this is healthy. The key becomes where does the pullback stop? If support on this pullback becomes a higher low that is positive and becomes a potential entry point for short term bullish trades.Keey your eye on key support levels. For the indices that is the S1 and S2 levels of Monday's large white candle. If those levels hold and buyers step into the market at higher lows that will be a buying opportunity for traders.For the DJIAS1 is the 8,250 area and S2 is the 8,050 area. Since the DJIA has risen above its Oct. 1o low, that 7,882 level is significant relative to the direction of its 6-week intermediate term trend; neutral or down.At this moment the SPX is barely above its Oct. 10 low of 839, which is a key level for the index. Monday's S1 level is 826 and the S2 is 801. So watch the pullback in context of these key support levels.As of this moment only the DJIA has an Intermediate Term Trend reading of Neutral. The Nasdaq and RUT can not change today as they are still trading below their October lows.Airline, Financial, Utility, Basic Material and Healthcare stocks are showing some strength this morning.Tuesday's Early ActionMoving Up: BIDU, STRA, UAUA, HANS, PNRA, MA, MON, FWLT, CNX, CFMoving Down: ESRX, ZION, PCLN, POT, AEM, X, BTU, GDX, FSLR, INFY, AMZN, DECK, NIHD, CLF, SOHU

Monday, November 24, 2008

DJIA + 396.97, +4.93%
SP500 + 51.78 +6.47%
NASDAQ Comp. + 87.67, +6.33%
Russell 2000 + 30.26, +7.44%
Exchange NYSE NASD
Advancing 3,261 2,211Declining 489 724
Oil $54.50 +$4.57
Gold $819.50 +$27.70
SOX 191.20 +10.98
VIX 64.70 -7.97
Strongest Sectors: XLF +15.19%...XLY +7.85%...XLE +7.23%
Weakest Sectors: XLU +1.01%...XLP +1.26%...XLV +1.99%
Sector Watch
Up Trending:
Sideways:
Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK
The rally that began on Friday broadened as the SPX, Nasdaq and RUT had larger point and percentage gains on Monday than they did on Friday. On the NYSE the number of advancing issues increased by 56% and the number of declining issues fell by 54%. The Nasdaq advancers also increased while decliners fell.
The Financial Sector, XLF, was the strongest sector up 15.19% on news of a government rescue plan for C which rose $2.18 or 57%.
Our Intermediate Term Trend reading on the DJIA changed to Neutral because the index closed for the second straight day above the Oct. 10 low support area. The Intermediate Term Trend on the SPX, which closed above its Oct. 10 low today, will change to Neutral on Tuesday if the index stays above the Oct. 10 support tomorrow.Index Commentary
The DJIA followed Friday’s bullish engulfing pattern with a large white candle that closed above Thursday’s R3, Wednesday’s R1 and R2…closed above its Oct. 10 intraday low for second straight day…watch R3 from Wednesday…8,500 important intermediate resistance level.
The SPX confirmed Friday’s bullish harami with a large white candle…closed above Thursday’s R2 and R3 and R1 from Wednesday…closed above Oct. 10 low…840 is key support area and 915 a key resistance area.
The Nasdaq confirmed Friday’s hammer with a large white candle…closed above Thursday’s R3 and Wednesday’s R1…1,500 is a key resistance area…still trading below Oct. 10 low.
The RUT confirmed Friday’s bullish harami with a large white candle…closed above Thursday’s R2 and R3 and Wednesday’s R1…450 is a key resistance area…still trading below Oct. 10 low.
Stocks to Watch
Of the 31 stocks we listed to watch for the next trading day only one was negative on Friday or Monday. This is to point out the importance of mental flexibility and being prepared for a support bounce when the Chart Signals suggest a strong probability of a move occuring. Some of the gains on just the stocks were equal to more than some traders' annual gains.Read Thursday's post and look at Monday's gains below. We were expecting this technical bounce as we had posted this Thursday evening:"Stocks continue to be technically oversold in the short-term, so be alert for a potential short-term bounce Friday or Monday. This could provide a bullish move on the few leading stocks or a counter bounce on the many down trending stocks."
The emphasis was as originally posted Thursday night. Stocks to Watch Posted on Thursday for FridaySupport BounceAXYS +5.21%Potential Support BounceSRCL +1.74%...CHRW +4.49%...TEVA +0.50%...SHLD +16.06%...FAST +5.03%
VMW+3.22%...WYNN +17.93%Stocks to Watch Posted on Weekend for MondayPotential Double BottomVRTX +6.86%...MBT +27.96%...UA +7.94% ...FSYS +16.77%...DGX +2.53%...ESRX +5.94%...UTX +5.23%...ARG +2.62%Morning Star PatternsFAST +5.03%...PRE +4.74%...FMC +8.61%Potential Support BounceTDS +11.73%...CMP +10.48%...OTEX +2.04%...AMAG +4.71%...ESI +8.92%...MHS +7.72%...RIMM +1.03%Support BounceURS +34.42%...MMM +3.20%...AMGN +1.99%Potential Bull FlagADM +7.53%...CBST +6.13%...MYGN +1.36%Stocks to Watch on TuesdaySupport Bounce and Potential Double BottomMBT...TDS...WYNN...CBST...ICE...HSC...NFLX...RIMM...WFC...USB...ZION...KEY...UYG...DE...PCP
Leading Stocks Holding Above 30 DMATEVA… AXYS…AYE…CL…DV…EZPW…MMM…PCLN…PPD
Stocks Moving Above 30 DMAANSS…ASIA…BAP…CBST…DLTR…ESI…FLR…FSTR…MIG…OSIP…PRGO…RCI…SHW…SWN…TKC…WMS
Stocks Moving Below 30 DMA
RTN
Stocks Staying Below 30 DMAAFAM…MYGN…VIVO…AOB…CERN…CHTT…FLIR…GILD…GIS…PSSI

As of 3 pm ET, the rally that began on Friday has continued to move higher. A quick look at key resistance areas to pay attention to:The DJIA which on Friday's close had moved back into the sideways trading range that started on October 10, is continuing to rise and has penetrated Thursday's R3 and Wednesday's R1...currently just below Wednesday's open...watch Wendesday's R2 and R3. Key resistance areas are 8,500 and 9,000.The SPX has moved back above its October 10 low and risen above Thursday's R2 and R3 levels as well as Wednesday's R1...840 is a key resistance/support area that the SPX is currently above...915 is the next key resistance area.The rally is broad with NYSE advancers leading decliners3,168 to 545 and on the Nasdaq 2,111 to 810.

Friday, November 21, 2008

DJIA + 494.13, +6.54%
SP500 + 47.59 +6.32%
NASDAQ Comp. + 68.23, +5.18%
Russell 2000 + 21.23, +5.51%
Exchange NYSE NASD
Advancing 2,049 1,777
Declining 1,161 1,170
Oil $49.93 +$0.51
Gold $791.80 +$43.10
SOX 180.22 +8.90
VIX 72.67 -8.19
Strongest Sectors: XLE +11.16%...XLU +10.00%...XLY +6.86%
Weakest Sectors: XLV +0.13%...XLB +1.11%...XLI +2.95%
Sector Watch
Up Trending:
Sideways:
Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK
Stocks rallied from down under support on Friday with the DJIA regaining more than Thursday’s loss and closing above support. The SPX, Nasdaq and RUT regained most of Thursday’s loss but closed just below Thursday’s close.
Advancers led decliners by about a 2 to 1 margin which was a respite from Wednesday’s and Thursday’s 9 to 1 margin in favor of decliners. All nine sectors moved higher on Friday.We were expecting this technical bounce as we had posted this Thursday evening:"Stocks continue to be technically oversold in the short-term, so be alert for a potential short-term bounce Friday or Monday. This could provide a bullish move on the few leading stocks or a counter bounce on the many down trending stocks."

The emphasis was as originally posted Thursday night.

Maybe Chart Signals do work.

This is a counter trend rally and only the DJIA has moved above its recent support for a potential breakout and reversal. The DJIA barely broke through so it is too early to conclude that Friday is anything more that a short term technical bounce and counter trend move. Watch the short term resistance areas as stated below in Index Commentary for clues if this counter trend bounce sets up a potential reversal point.

Index Commentary
The DJIA formed a bullish engulfing pattern…breaks above below its Oct. 10 intraday low…watch R3 from Thursday and R1 from Wednesday…8,500 important intermediate resistance level.
The SPX formed a bullish harami…watch R2 and R3 from Thursday and R1 from Wednesday.
The Nasdaq formed a hammer…watch R3 from Thursday and R1 from Wednesday.
The RUT formed a bullish harami…watch R2 and R3 from Thursday and R1 from Wednesday.

Decliners again led advancers by a 9 to 1 margin. All nine sectors moved lower.
Stocks experienced a technical bounce in the morning that faded as concerns over the auto industry and jobless data weighed on the market as sellers gained the upper hand sending stocks lower.
Stocks continue to be technically oversold in the short-term, so be alert for a potential short-term bounce Friday or Monday. This could provide a bullish move on the few leading stocks or a counter bounce on the many down trending stocks.
Oil dropped $4.92 sending the Energy ETF (XLE) down over 12%. Gold rose $12.70.

Trend Reversal StrategyRIMM stopped out at $44.70 today. The options closed out at 2.50 with a 41 cent gain or 19% gain. We stated in our Wednesday morning webcast that it would be valid to move the stop even higher in the current volatile market to lock in the strong one day gains, but that we would follow the strategy rules for illustrative purposes.

Tuesday, November 18, 2008

DJIA + 151.17, +1.83%
SP500 + 8.37, +0.98%
NASDAQ Comp. + 1.22, +0.08%
Russell 2000 - 3.79, -0.84%
Exchange NYSE NASD
Advancing 1,306 1,163
Declining 2,325 1,749
Oil $54.39 -$0.56
Gold $732.70 -$9.30
SOX 191.89 -3.83
VIX 67.64 -1.51Strongest Sectors: XLE +2.80%...XLK +1.39%...XLP +0.69%
Weakest Sectors: XLF -1.43%...XLB -1.12%...XLU -1.08%Sector Watch
Up Trending:
Sideways:
Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK
Stocks rallied late Tuesday moving the DJIA and SPX into positive territory for the day. However market breadth was weak as the Nasdaq was essentially even and the RUT was down for the day. Decliners led advancers by almost a 2 to 1 margin. Five sectors were up for the day while four were lower.
Oil moved fell another 56 cents hitting a new 52-week low and continuing the down trend since July. Gold was down $9.30.
Continue to maintain mental flexibility and trade with the current trading range (sideways trend – bullish at support and bearish at resistance) while at the same time being prepared to trade bearish if support breaks.
Index Commentary
The DJIA formed lower high and lower low …white spinning top bullish harami …held above Oct. 10 support.
The SPX formed a hammer and bullish harami…closed at the S2 level of Thursday’s large white candle…closed above Thursday’s low.
The Nasdaq formed a hammer and bullish harami…closed above Thursday’s intraday low.
The RUT formed a hammer…made a new 52-week intraday and closing low…still forming potential double or triple bottom.
Trend Reversal StrategyIn our webcast Monday evening we demonstrated a a real-time virtual trade on RIMM because it met the criteria of our Trend Reversal Strategy that we shared in our October 25, 2008 post. We shared this strategy because we saw that several individual stocks were beginning to exhib it Trend Reversal characteristics at that time. We invite you to revistit that Strategy. Specificially RIMM's chart showed a potential double bottom pattern, a bullish engulfing candle pattern and a bullish divergence on the 14/5 stochastic. RIMM closed on Monday at 42.24 and we entered on Monday evening a Buy Stop to buy 10 December 55 calls if RIMM rose to 42.82 on Tuesday morning. A stop contingent on the order being filled was entered at a stock price of 37.72.The order was triggered at 7:31 am and filled at 2.09 per contract. RIMM rose $5.01 or 11.86% from Monday's close and the Dec 55 calls closed at 3.45, a gain of $1.36 or 65% from our Tuesday morning entry. The trailing stop is moved up to 44.70 after the first day.Stocks to Watch on Wednesday
Potential Bull FlagGILD…forms low day hammer
Potential Trend ReversalIBM
Leading Stocks Holding Above 30 DMATEVA…GIS…MMM…VIVO…AYE…FLIR…PSSI
Stocks Moving Above 30 DMAANSS…CERN…CHTT…CL…PCLN…PRGO…SHW
Moving Below 30 DMAASIA…ESRX…JCOM…LFL…
Stock CommentaryCELG lower high…lower low…lower close in sideways pattern
ESRX lower high…lower low…lower close…holding support
GE doji…no confirmation of hammer, inverted hammer or Monday’s bullish harami
MMM piercing line patter on bounce off 30 DMA
UTX lower high…lower low…piercing line pattern
HPQ gaps higher forms dragonfly doji on strong than expected preliminary Q4 results and full year results
Tuesday’s ActionMoving Up: MA, PCLN, PNRA, V, SOHU, LDK, AEM, MS, POT, STRA
Moving Down: DECK, BIDU, FSLR, ANR, BTU, FWLT, SCHN, MEE, NIHD, AMZN, DRYS, BUCY, CLF, ESRX, NDAQ, GRMN, CNX, NUE,
Intermediate Term Market Trend: Neutral – 5 weeks
Short Term Market Trend: Down

Friday, November 14, 2008

DJIA - 337.94, -3.82%
SP500 - 38.00, -4.17%
NASDAQ Comp. - 79.85, -5.00%
Russell 2000 - 34.71, -7.07%Exchange NYSE NASD
Advancing 773 605
Declining 2,780 2,261
Oil $57.04 -$1.20
Gold $742.50 +$37.50
SOX 201.39 -13.76
VIX 66.31 +6.48
Strongest Sectors: XLY +2.98%...XLB +1.16%...XLI +0.86%
Weakest Sectors: XLE -4.15%...XLK -4.57%...XLU -2.37%
Sector Watch
Up Trending:
Sideways:
Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLKOn Friday stocks opened and moved lower until mid-day when a rally drove the DJIA up 400 points to 8,900. Then the market began a 400 point sell off during the last 45 minutes of the day with the DJIA closing near 8,497. Decliners led advancers by a large margin and six of nine sectors moved lower.
Since the October 10 low in the DJIA, the SPX, Nasdaq and RUT have all made intra-day lower lows. The DJIA so far has held above its October 10 low. As we posted on October 10, if support did hold building a new base would take at least four to eight weeks. The market is five weeks into that process and still looks like a new base building. Traders need to maintain mental flexibility and trade with the higher probability of a trading range (sideways trend – bullish at support and bearish at resistance) while at the same time being prepared to trade bearish if support breaks.We returned Thursday night from teaching a two-day workshop to more than 200 traders on advanced and combination option strategies. The workshop was a succes and many of those in attendance let us know it made an important difference for them. One trader described it this way; "Great workshop in LA! I really enjoyed learning the strategies of combination options from you. I have learned many valuable lessons from this workshop but the lessons I value the most are your comments about a trader's mentality: attitude, discipline, and consistency. I know I struggle with this the most; it has always been a battle within. Your comments have inspired me to take a more disciplined approach to trading. Thank you for motivating and enlightenign me! I have learned so much about myself trading in the past 2 months trading. I never expected to be analyzing myself more than the stock charts."Index Commentary
The DJIA formed a higher high and higher low with sellers appearing at the 30 DMA…pulled back to Thursday’s S1 support level while closing lower for the day.
The SPX moved slightly above Thursday’s high before pulling back to the S1 level of Thursday’s large white candle…still above Thursday’s low.
The Nasdaq formed a lower high and higher low…an inside day…closed near the open or mid-point of Thursday’s price bar.
The RUT formed a lower high and higher low…an inside day…closed near Thursday’s open…still forming potential double or triple bottom.

Thursday, November 13, 2008

DJIA + 552.59, +6.67%
SP500 + 58.99, +6.92%
NASDAQ Comp. + 97.54, +6.50%
Russell 2000 + 38.43, +8.49%
Exchange NYSE NASD
Advancing 2,650 2,089Declining 919 799
Oil $58.24 +$2.08
Gold $705.00 -$13.30
SOX 215.15 +14.36
VIX 59.83 -6.63
Strongest Sectors: XLE +11.75%...XLB +8.14%...XLY +7.81%
Weakest Sectors: XLP +4.00%...XLV +5.36%...XLI +5.36%
Sector Watch
Up Trending:
Sideways:
Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK
After the DJIA fell to 7,965 around 1 pm ET buyers stepped into the market just like they had on 10, 16 and 22 to 27.
Just last night we posted; “If the DJIA 7,882 to 8,143 support area is good we should see big money step in and begin to buy in that area as they did on Oct. 10, 16, 22, 23, 24, 27 and 28. Thursday and Friday become a major retest area.”
And did they buy…while the DJIA rose 552.59 from yesterday’s close, the range from the low to the high on Thursday was 911.17 points. The daily range on October 13, the single largest daily point rise in Dow history, was 965.81. The daily range on October 28, the second largest daily point rise in Dow history, was 907.35. Today’s point rise from its intraday was equivalent to record setting days.
So are the big money buyers still there in the area of support?Yes and in a very big way just like they have been since October 10.

Monday, November 10, 2008

DJIA - 73.27, -0.82%
SP500 - 11.78, -1.27%
NASDAQ Comp. - 30.66, -1.86%
Russell 2000 - 12.69, -2.51%
Exchange NYSE NASD
Advancing 1,155 857Declining 2,372 1,985
Oil $62.41 +$1.37
Gold $746.50 +$12.30
SOX 214.48 -8.71
VIX 59.98 +3.88
Strongest Sectors: XLE +0.34%...XLP +0.29%...XLI +0.04%
Weakest Sectors: XLF -2.95%...XLU -2.41%...XLY -2.32%
Sector Watch
Up Trending:
Sideways:
Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK
Buyers came in early Monday to follow through on Friday’s rally but a sell off began in the first 30 minutes and by mid-day E.T. the broad indexes were turning negative. While the DJIA and SPX kept more than half of Friday’s gains, the Nasdaq gave back more than 75% its gains and the RUT fell more on Monday than it rose on Friday.
Monday is a good example of why pre-market futures are an inconsistent guide to the trading day. Today was just another example of futures being up nicely and the open and the market finishing down for the day.
Both gold and oil rose on Monday and commodity related stocks gold, coal oil, steel and Ag-related were relatively strong. Solar stocks were weak on Monday as were financial and tech stocks especially semiconductors.
The market continues to trade in the current sideways trading range since the October 10 low bouncing between support and resistance. The failure of all four broad indexes to confirm Friday’s bullish harami is classic sideways trading range price action; Buyers and sellers fighting it out.
As we wrote on Friday;”Either way Monday should prove to be an exciting day of market action as buyers and sellers continue to battle it out.” And sure it enough that’s exactly the way it was.
Index Commentary
The DJIA rose to its 30 DMA where sellers pushed it back to close under its 20 DMA…failed to confirm Friday’s bullish harami.
The SPX rose above and then closed below its 20 DMA…failed to confirm Friday’s bullish harami.
The Nasdaq traded and above and then closed below its 20 DMA and failed to confirm Friday’s bullish harami.
The RUT gapped up to its 20 DMA and sold off below Thursday’s low…did not confirm Friday’s bullish harami…continues to form a potential head and shoulders bottom.
In the DJIA, SPX and Nasdaq Thursday’s low and Monday’s high is the key short-term support and resistance areas to watch. On the RUT it is Monday’s high and low.Stocks to Watch on TuesdayLeading StocksBreaking Above 30 DMAESRX...PRGO...SHW...UTXSupport BounceFLS...VMI...MTD...AZO...SYNA...UNP...BNIAt ResistanceCLI...AVP...DB...CRDN...SPG...DRIV
Stock CommentaryPCLN pulled back at its 30 DMA for the second straight day.
ONXX rose further confirming its breakout out of head and shoulders bottom with price target of $34.50
NVDA pulled back after rising to 9.10 and did not breakout above $9.11…pulling back from its 50 DMA to the support of its 30 DMA.Monday’s Action
Moving Up: ANR, BTU, AEM GDX, POT, CF, CNX, BUCY, ONXX, ESRX, STRA, HANS
Moving Down: FSLR, BIDU, GS, MA, DECK, LAMR, V, MER, PNRA, NIHD, LDK, NDAQ, ZION, KMT, JASO, RYS, AMZN, MS, KBE
Intermediate Term Market Trend: Down
Short Term Market Trend: Down

Friday, November 7, 2008

DJIA + 248.02, +2.85%
SP500 + 26.11, +2.89%
NASDAQ Comp. + 38.70, +2.41%
Russell 2000 + 9.95, +2.01%
Exchange NYSE NASD
Advancing 2,386 1,781Declining 1,046 1,074
Oil $61.04 +$0.27
Gold $734.20 +$2.00
SOX 219.44 +3.75
VIX 56.10 -7.58
Strongest Sectors: XLK +4.17%...XLF +1.27%...XLB +0.08%
Weakest Sectors: XLY -1.21%...XLU -1.20%...XLI -0.86%
Sector Watch
Up Trending:
Sideways:
Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLKIt has been four weeks since the October 10 low and the market continues to build a base with buyers becoming more aggressive and sellers less aggressive during the past two weeks. The base building is not over and it is still not possible to say with certainty that October 10 is the bottom, but each day has been adding positive technical action on the chart.In our Thursday night webcast we pointed out that the short-term Momentum line was in the lower reversal zone for the second straight day and said that the indicator seldom spends more than two days, so don’t be surprised if the market moves up within a day or two.
We also referred to our comments of the past four weeks regarding the October 10 low and how if that support level did hold that it would likely take at least four to eight weeks to build a base from which a new up trend could move.
We also reiterated how the buying in the market had become more aggressive and the selling less aggressive last week until Tuesday of this week. We also said that if the market did bounce from a higher low that would be further indication that buyers were getting more aggressive.
On Friday buyers stepped in and this time from the 8,640 level on the DJIA. If stocks follow through and continue to move higher on Monday watch the price action for strength or weakness at the 9,650 horizontal resistance level on the DJIA during the week. Either way Monday should prove to be an exciting day of market action as buyers and sellers continue to battle it out.
Index Commentary
The DJIA closed just below its 20 DMA after bouncing off the S1 level of the October 28 large white candle…formed a bullish harami.
The SPX bounced off the S1 level of its October 28 large white candle at 900 and formed a bullish harami.
The Nasdaq closed bounced off the S1 support level of its October 28 large white candle at 1,600 and formed a bullish harami.
The RUT bounced off the 495 support level and formed a bullish harami…continues to form a potential head and shoulders bottom.
Stocks to Watch on MondayLeading Stocks Breaking Above 30 DMA
ANSS…BAP…BCR…BIIB…BLUD…CTSH…DNA…EZPW…FLR…GIS…KNL…LFL…MBT…OI…OSIP…QSII…RTN…SAY…TECH…TEVA…TKC…VIP…WMS
Stock Commentary
PCLN rose after better than expected earnings Thursday afternoon, watch for potential double bottom breakout.
ONXX gapped up after better than expected earnings Thursday, broke out of head and shoulders bottom with price target of $34.50NVDA rose after positive earnings on Thursday, bounced from higher low…watch for breakout above $9.11.
RRGB after a gap down rose to form a large white candle after positive earnings on Thursday…broke through old support resistance at 13.
HANS rose from a higher low after a positive earnings report on Thursday...forming higher low?
FLR rose from a positive earnings report Thursday...forming a head and shoulders bottom…watch for potential breakout and chart price target of 58.
DIS gapped lower and then rose on Friday after reporting 43 cents earnings below estimates of 49 cents a share on Thursday…potential triple bottom?
Friday’s Action
Moving Up: BIDU, PCLN, FSLR, CF, ONXX, MA, AEM, CNX, MOS, SCHN, STRA, ESRX, HANS, ZION, NUE, X, POT, BTU, AGU, MEE, AMZN, V, INFY, LDK, BUCY, LAMR, IPI, SINA,
Moving Down: DECK, GS, NDAQ, DRYS
Intermediate Term Market Trend: Down
Short Term Market Trend: Down

Wednesday, November 5, 2008

DJIA - 486.01, -5.05%
SP500 - 52.98, -5.27%
NASDAQ Comp. - 98.48, -5.53%
Russell 2000 - 31.13, -5.74%
Exchange NYSE NASD
Advancing 690 596
Declining 2,765 2,272Oil $65.30 -$5.23
Gold $742.40 -$14.90SOX 236.25 -11.46
VIX 54.56 +6.83
Strongest Sectors: XLV -1.47%...XLP -1.77%...XLU -1.85%
Weakest Sectors: XLF -9.15%...XLK -6.05%...XLY -5.52%
Sector Watch
Up Trending:
Sideways:
Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK
Tuesday’s Election Day rise into resistance reversed on Wednesday as profit takers sold at resistance. The decline was relatively modest until just before mid-day when the sell off accelerated. Wednesday’s sell off took back all of Tuesday’s gain and more.
Stocks, oil and gold all fell pulling over 75% stocks down on both the NYSE and Nasdaq. The sell-off was broad as all nine sectors moved lower.
Many stocks, like the DJIA and other indices, over the last six days had moved into the horizontal resistance, established since October 14. The broad indices have been in a sideways trading range over the past three weeks bouncing between support and resistance.
Wednesday’s move down did break the low of the high day creating an entry signal for short-term bearish trades on many stocks, ETFs and indices. The price action was also an exit signal for many short-term bullish trades.Index Commentary
The DJIA formed a bearish engulfing pattern in the area of horizontal resistance candle closing below its 30 DMA.
The SPX formed a bearish engulfing like pattern closing below its 30 DMA and near its 20 DMA.
The Nasdaq formed a large black candle that broke the low of the high day and closed at its 20 DMA.
The RUT formed a large black candle falling from horizontal resistance, breaking the low of the high day and closing just below its 20 DMA.
Wednesday’s ActionMoving Up: None in our watchlist
Moving Down: FSLR, BIDU, MA, GS, POT, ANR, MON, AMZN, CF, DECK, SOHU, V, NUE, CNX, FWLT, MEE, X, MOS, BTU, IPI, SCHN, SINA, ZION, KRE, KBE, PNRA, CLF, NIHD, LDK, BUCY, MER, INFY, FMCN, DRYS, MS, AEM, PCLN, KMT, JASO, ONXX, HANS, LCC, UAUA, RF, NDAQ, STRA, AGU, GRMN, EBAY, EXPE, LAMR
Intermediate Term Market Trend: Down
Short Term Market Trend: Neutral

Tuesday, November 4, 2008

DJIA + 305.45, +3.28%
SP500 + 39.45, +4.08%
NASDAQ Comp. + 53.79, +3.12%
Russell 2000 + 7.47, +1.39%
Exchange NYSE NASD
Advancing 2,779 1,843Declining 743 1,041
Oil $67.81 +$6.62
Gold $757.30 +$30.50
SOX 247.71 +10.61
VIX 47.71 -5.95
Strongest Sectors: XLE +6.44%...XLF +5.63%...XLB +4.69%
Weakest Sectors: XLV +1.31%...XLP +1.47%...XLU +1.88%
Sector Watch
Up Trending:
Sideways:
Down Trending: XLP, XLF, XLY, XLV, XLI, XLE, XLU, XLB, XLK
After falling through its 30 DMA on Monday, the VIX dropped another 5.95 points or 11.08% to close at 47.72 on Election Day. The closing high for the VIX was October 27 at 80.06. In just a week and a half the VIX has fallen by 40% while the markets have risen.
Oil prices rose for the second day in a row, rising 10.36%. Energy stocks were the leading sector as a result. Gold rose $30.50 and commodity related stocks also performed well on Election Day.
The broad market indexes rose into the zone of resistance formed on October 14. Today the DJIA had a higher close than on October 14 and this is the highest close since Monday, October 6. Additionally all nine sectors closed higher with XLE, XLF and XLB the strongest on Tuesday.
The DJIA closed above its 30 DMA for the first time since September 8. The SPX closed a point above its 30 DMA, which is its first close above that level since September 2. The Nasdaq and RUT are still below their respective 30 DMA.
While it is still too early to say a new uptrend has begun, there is certainly more and more technical evidence each day that the big money institutions are becoming more aggressive in their buying and less aggressive in their selling.
Our blog post on October 10, “Is this the beginning of the down trend?” appears more and more insightful every single day. What were you feeling on October 10 and how far off did you think we were when we posted that day?
Most stocks in our watchlist had very solid gains on Tuesday...see Tuesday's action below.Index Commentary
The DJIA formed a large white candle closing above its 20 DMA in the area of horizontal resistance.
The SPX formed a large white candle that continued the short term uptrend…Monday’s inside day was a pause rather than a short term reversal…closed a point above its 30 DMA.
The Nasdaq formed a spinning top 16 points below it 30 DMA in the area of horizontal resistance.
The RUT formed a spinning top in the area of resistance.
Tuesday’s ActionMoving Up: BIDU, MA, FSLR, POT, V, MON, GS, AEM, FWLT, MOS, BUCY, DECK, CLF, SOHU, AMZN, CF, X, GDX, IPI, CNX, SINA, AGU, SCHN, ZION, NDAQ, KBE, PNRA, KRE, ANR, NUE, PCLN, MEE, BTU, FMCN, NIHD, INFY, LDK, MER, EBAY, JASO, MS, RF
Moving Down: STRA, UAUA, LCC,
Intermediate Term Market Trend: Down
Short Term Market Trend: Up

Last night in my internet commentary, I was asked about why the SPX and VIX were not consistent on Monday. The listener noticed that the SPX was unchanged and the VIX had moved down. I responded that it was not inconsistent and that the correlation was not always 100% from moment to moment. I added that sometimes the VIX will act ahead of the market and give us a clue of what the market is going to do.Tuesday morning it looks like the market is not doing what some in the media said was happening on Monday...that the market was waiting for the outcome of the presidential electon on Tuesday. At 11:49 ET the DJIA and SPX are up over the 3%. The VIX on Monday did give us the clue that the market was ready to move higher on Tuesday. Maybe the market is just glad to have the election process done, regarless of the outcome?Oil is also moving higher, so energy and commodity related stocks are having a big day also..airline stocks are not.MA and V up big Tueday morning.Check out the big 6 to 17% gains on these stocks: JASO, AEM, FWLT, IPI, MA, V, GDX, MOS, MEE, BTU, AGU, BUCY, CLF, LDK FSLR, FMCN, NIHD, BIDU, SCHN, CNX, POT, ANR, X, MON, ZION.

Oil prices continued their down trend. Inversely airline stocks rose. Look at the charts of ALK, AMR, CAL, DAL, LCC and UAUA.

Index Commentary
The DJIA formed a doji and closed above its 20 DMA for the third straight trading day.
The SPX formed an inside day, a small black spinning top candle while closing above its 20 DMA for the third straight day.
The Nasdaq formed a small white spinning top and closed above its 20 DMA for the second trading day in a row.
The RUT formed a small white spinning top that could be seen as a shooting star and closed above its 20 DMA for the second day.
Monday’s Action
Moving Up: FSLR, LDK, CLF, ZION, DRYS, UAUA,CNX, X, AEM, JASO, LAMR, SOHU, LCC,
Moving Down: DECK, MA, GS, NUE, MOS, ANR, V, NIHD, CF, AMZN, BIDU, STRA, NDAQ, MON, MEE, IPI, FWLT, BTU, INFY
Intermediate Term Market Trend: Down
Short Term Market Trend: Up

Dave Johnson, CMT

David Johnson, CMT
Investment professional for 40 years including analyst, portfolio manager, trader and trading instructor. Performing computer based technical analysis since 1990. Previously quantitative and fundamental analysis. Has trained more than 40,000 traders in over 250 events including two and four day training events.
Email: chartsignals@yahoo.com